IBM Shifting Focus to Services From Products
Aug. 10–To survive a business downturn that hampered corporate performance in the past, IBM has decided to transform itself from a product-focused company into a provider of services, which currently represent 50 percent of its global turnover.
For the past 10 years, IBM has attempted to steer through rough times brought about by new rivals and marketing and technology challenges.
According to Saul Berman, partner and global executive in Strategy and Change, a consulting arm of IBM Corp, the company has decided to move its focus from products to services, which offer more economic potential and opportunities.
Its services cover business consulting, integrated technology, strategic outsourcing, and application management.
“Customers can get software and hardware from anywhere, but when it comes to service, we’re confident that we offer better services and commitment than others,” Niramol Jindanuwat, management consultant at IBM Business Consulting.
The company has been forced to transform itself by reviewing its existing capabilities and the directions it should be headed in the future. The three keys to a successful transformation are: course, capability, and conviction.
A recent report conducted by IBM on 1,238 companies found that while growth did not have to be consistent, conviction did, as organisations that grew successfully were distinguished by their resilience to bounce back from setbacks.
Ninety-four percent of successful growers experienced at least one year of below-median growth, with 72 percent falling below the median for three years or more. Furthermore, the research found that companies which had made the most progress in integrating business processes and infrastructure both internally and externally showed clear gains in business results when compared to their peers. As well, a company’s ability to grow was not constrained by industry maturity or location.
“While the world looks to Asia Pacific for growth, this research confirms that sustainable growth can’t be achieved through location and opportunity alone,” said Mr Berman.
“Instead, companies must aim for targets above and beyond what they and their peers typically expect and transform their business accordingly by aligning business processes, people, and technology to deliver outcomes not previously possible.”
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